Don Farrell (SA, Australian Labor Party, Shadow Minister for the Centenary of ANZAC) Share this | Hansard source

No, it isn't. I will take that interjection. Tom Playford understood why, in a monopoly situation for electricity, we needed to have a government-controlled electricity system. So in 1946, with the support of the federal Chifley government, he nationalised the South Australian electricity system. That system provided the cheapest and most efficient electricity system in this country. All that went out the window when the Liberals in South Australia sold that monopoly. That's when our problems started with electricity. If that decision had not been made—if Senator Xenophon hadn't supported the second reading speech to allow that bill to proceed—then we would not have the problems that we have today.

I happened to be in Adelaide on the night of the storm that Senator Fawcett was talking about. That was the worst storm in our history. Anybody who'd gone out to the north of Adelaide would understand the catastrophic effect of that storm that night. To connect that catastrophic storm with more serious problems in the electricity market is an absolute misrepresentation, and I suspect that even Senator Fawcett knows that because, if he had been in town that day, he'd recall just how bad the weather was. I was in Clare the day after the storm, and there was one street where you could not go in any direction because massive trees had been blown over. It was a catastrophic storm, and the fact that the Liberals continue to make reference to that in relation to electricity prices is an outrage. I'm sure Senator Bernardi would agree with me in respect of that.

But we are not here today to talk about the misrepresentations by the Liberal Party—I know Senator Bernardi knows a lot about that. As noted in the explanatory memorandum, A New Tax System (Goods and Services Tax) Amendment (Make Electricity GST Free) Bill 2017 would make the supply of electricity GST free. This would commence from the first day of the quarter following royal assent. There are two important points from the explanatory memorandum that I will address:

… this Bill will make electricity GST-free irrespective of the views of State and Territory Governments. The enactment of this Bill will override the commitment, previously legislated in the A New Tax System (Goods and Services Tax) Act 1999 and the A New Tax System (Managing the GST Rate and Base) Act 1999, to only vary the base of the GST with the unanimous support of the State and Territory Governments.

…   …   …

GST revenues granted to the State and Territory Governments would fall by around $2 billion each year …

The Senate dealt with the issue of GST modification only a few months ago. At that time, Labor noted that parliament should be the end of the process, not the start. It's a point we have been clear on in the past. At the time, Senator Gallagher said:

We think in all fairness, considering how important the GST is for states and territories, and indeed the agreement that exists between the Commonwealth and the states and territories on GST arrangements, that these discussions about how this should be done and when it should be done needs to happen with all of those parties but also needs to be done at the start of the process, not at the end of it here in this chamber.

This goes to the heart of the process for changing the GST. The GST may be levied by the Commonwealth, but the revenue from the GST is distributed to the states and territories. This arrangement is set out in the Intergovernmental Agreement—or IGA—on Federal Financial Relations. Clause A4(c)i provides that the standing Council on Federal Financial Relations, chaired by the Commonwealth Treasurer, must approve 'changes to the GST base and rate'. Clause A6 of that agreement requires that any such agreement be unanimous. Whilst it is true that it can be difficult to gain the unanimous support of the state, territory and Commonwealth governments, this is a matter of due process and good faith. If the process is not followed, it could potentially allow any government, present or future, to ride roughshod over revenue for states and territories.

Whether you like the GST or not, this bill will remove roughly $31 billion of revenue from the states and territories over the next 10 years, according to the Parliamentary Budget Office costings attached to the explanatory memorandum. It goes without saying that the premiers and chief ministers of those states and territories will be the first to let you know which schools, hospitals and services will be hit by the sudden collapse in revenue. Some legal commentary has suggested that the Commonwealth would be legally free to disregard the IGA and amend the GST legislation unilaterally. That is the presumption on which this bill is also based. Even if this happens to be the case, the inherent imposition and purpose of the goods and services tax is underpinned by good faith and intergovernmental cooperation.

We can spare ourselves the lengthy discussion about horizontal fiscal equalisation, but I take this opportunity to point out that Labor deeply understands the complexity and challenges of the GST. The Leader of the Opposition, Bill Shorten, recently outlined Labor's Fair Share for WA Fund. Labor would invest $1.6 billion in Western Australia in the first budget of a Shorten Labor government—which is looking closer and closer, and I'm sure Senator Sterle would be delighted to hear that news and for that to happen. That would bring Western Australia's funding up to the equivalent of 70c in the dollar, up from the current 33c.

I re-emphasise the importance of agreement. The job-creating infrastructure projects that would flow would be decided in agreement with the Western Australian government on the advice of local businesses and the community. On that basis alone, we cannot support the bill as a matter of due process. We would also add that this bill does not address the issues that underpin the Australian energy crisis under the present government. Wholesale electricity prices have doubled in the four years this government has been in power. This is particularly important for businesses for whom this bill has no impact, as GST-taxable businesses are able to claim input tax credits for the GST included in the price of the electricity they consume.

The government refuses to give full and fair consideration to the Finkel review, including the clean energy target. Business groups, environmental groups, unions, industry and stakeholders all believe that the worst outcome for energy consumers and suppliers alike would be the absence of any credible and enduring energy and climate policy in Australia. This bill will not achieve the cheaper, reliable and cleaner energy that households and businesses need. Without reform, Australia will endure higher prices, reduced security, lost investment opportunities and stubbornly high emissions. The Turnbull government stumbles from one energy crisis to another—in fact, they seem to stumble from one crisis to another on a whole range of things. Yes, I know you are agreeing with me there, Acting Deputy President Bernardi. I know that you know that what I'm saying is absolutely true. The Prime Minister may have accomplished his plan to get energy retailers to write letters to customers—what a terrific thing to do—but he is yet to start talking about any real action on implementing a clean energy target to bring electricity prices down for all Australians. Labor has extended the offer to work, in good faith, on an energy policy that is clean and provides certainty for businesses and households.

The Prime Minister spends the majority of his press conferences attacking Labor for the energy crisis his government has presided over, and he refuses to take any serious action on it. Experts, industry and even his own Finkel review have said clearly that it is government policy inaction that is driving up electricity prices and that a CET is the solution to crippling policy paralysis. Even the CEO of Snowy Hydro, a proponent of the Prime Minister's favourite pet project, has called for the government to adopt a CET. Why doesn't the Prime Minister listen to him? I think that's the question.

I respectfully note that Senator Leyonhjelm is not proposing this bill to be a panacea to the electricity crisis, and also has a different view to the circumstances precipitating the crisis. In summary, Labor will not be supporting the bill, but I take the opportunity to note that Labor is willing to work constructively in the parliament on delivering cleaner, cheaper and more reliable energy.